China’s fixed income market consists of three segments:
Onshore CNY market, consisting of central government bonds, policy bank bonds and bonds issued by local governments, corporations, etc. It is the largest of the three segments by notional outstanding.
Offshore foreign currency market (mostly in USD), consisting of bonds issued by Chinese companies and denominated in currencies other than CNY (mainly USD). Although much smaller than the onshore CNY market, the offshore foreign currency market can provide attractive opportunities for alpha, especially in the offshore high-yield credit sector.
Offshore CNH market, consisting of “dim sum” bonds which are bonds traded in Hong Kong and denominated in offshore Chinese RMB (CNH).